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THE head of Volkswagen's luxury arm Audi was arrested on Monday, the most senior company official so far to be taken into custody over the German carmaker's emissions test cheating scandal.

Munich prosecutors said Rupert Stadler was being detained due to fears he might hinder an ongoing investigation into the scandal, plunging Volkswagen (VW) into a leadership crisis.

News of the arrest comes as VW's new group CEO Herbert Diess is trying to introduce a new leadership structure, which includes Stadler, and speed up the group's shift towards electric vehicles in the wake of its emissions scandal.

The Munich prosecutor's office said in a statement: "As part of an investigation into diesel affairs and Audi engines, the Munich prosecutor's office executed an arrest warrant against Mr ProfessorRupert Stadler on June 18, 2018."

A judge in Germany has ordered that Stadler be remanded in custody, it said, to prevent him from obstructing or hindering the diesel investigation.

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A spokesman for Porsche SE, the company that controls VW and Audi, said Stadler's arrest would be discussed at a supervisory board meeting on Monday.

VW admitted in September 2015 to using illegal software to cheat US emissions tests on diesel engines, sparking the biggest crisis in the company's history and leading to a regulatory crackdown across the auto industry.

The US filed criminal charges against former VW CEO Martin Winterkorn in May, but he is unlikely to face American authorities because Germany does not extradite its nationals to countries outside the European Union.

The Munich prosecutors said Stadler's arrest was not made at the behest of US authorities.

The executive was arrested at his home in Ingolstadt, in the early hours on Monday, they said.